UPM Annual Report 2018

Contents

UPM AT A GLANCE 4

UPM at a glance: UPM Biofore – Beyond Fossils

6 8

Year 2018 in brief

From the President and CEO

STRATEGY 10

From fossils to bioeconomy UPM strategy – Aiming higher Aiming higher in performance

14 16 17 18 20 24 26 28 30

UPM as an investment Spearheads for growth

Annual General Meeting

Innovations for growth and competitiveness

Value from responsibility

Guided by the Biofore strategy – 2030 responsibility targets Megatrends drive demand for renewable and responsible solutions

Risks and opportunities

UPM-Kymmene Corporation will hold its Annual General Meeting on Thursday 4 April 2019 at 14:00 (EET), at Messukeskus, Messuaukio 1, 00520 Helsinki, Finland. Instructions for those wishing to attend are given in the notice to the meeting, which is available on the company’s website at www.upm.com/agm2019. Dividend The Board of Directors proposes to the Annual General Meeting that a dividend of EUR 1.30 per share be paid for the 2018 financial year. The dividend will be paid to the shareholders who are registered in the company’s shareholders' register held by Euroclear Finland Ltd on the dividend record date 8 April 2019. The Board of Directors proposes that the dividend be paid on 17 April 2019. Financial reports in 2019

BUSINESSES 32

UPM Biorefining UPM Energy UPM Raflatac

36 38 40 42 44 46

UPM Specialty Papers

UPM Communication Papers

UPM Plywood

Strategic actions for future growth

SOCIETY AND ENVIRONMENT 48

Stability through stakeholder engagement

54 58 60 62 64 66 68 70 72 74 76 78

Our people

Continuous safety improvements

Responsible and efficient sourcing is based on good partnerships

Sustainable and safe products Active customer collaboration

UPM’s value creation also generates tax revenues

Committed to sustainable forestry

Continuous improvement of resource-efficiency in production

Responsible water use

UPMwill publish the financial reports in 2019 as follows:

Climate actions and energy efficiency Circular economy at the core Summary of our societal impacts

UPM InterimReport for January–March (Q1) on 26 April 2019 UPMHalf Year Financial Report for January–June (Q1–Q2) on 23 July 2019 UPM InterimReport for January–September (Q1–Q3) on 24 October 2019

GOVERNANCE AND COMPLIANCE 80 Compliance 83 Governance principles 90 Remuneration 92 Board of Directors 94 Group Executive Team 96 GRI content index – short version 98

Independent Practitioner’s Assurance Report

ACCOUNTS 2018 99

Report of the Board of Directors Financial Statements 2018

120 183 187 192 194 197 199

Auditor’s report

Other financial information More on responsibility

UPM on a world map

Addresses

Annual General Meeting

198

199

UPM ANNUAL REPORT 2018

UPM ANNUAL REPORT 2018